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USD Plummets As S&P 500 Faces Largest Single Day Decline Since June; RBA Cuts Rates

The Dollar Index is declining for the third consecutive day as the S&P 500 is down by the most since late June. The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) falls -28 (-0.25%) to $10781 at the time of writing.

The largest event risk today occurred during Asia-Pacific. The Reserve Bank of Australia cut its benchmark rate by 25bps, which was largely anticipated by analysts surveyed by Bloomberg News. The RBA also reiterated many of its former statements. RBA Governor Stevens said, “The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand … The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”

Global equities are moderately bearish today with the only bright spot being Japan, which pares some of its declines yesterday: S&P -0.58%; Euro Stoxx -0.65%; FTSE -0.23%; Nikkei +1.00%; Hang Seng -1.34% at the time of writing.

The AUDUSD is firmly higher by +0.50% at the time of writing. Most of these advances occurred immediately following the RBA Rate Decision. Theoretically, a rate cut would propel a weakening of the currency. However, many traders expected the rate cut (Credit Suisse OIS indicated a 91% of a rate cut prior to the event) so the consequent gains in AUDUSD may indicate that the cut was already priced in.

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